Cormies Grocery & Deli Inc v. Colony Insurance Co et al

Filing 36

MEMORANDUM RULING granting 13 Motion to Strike Affidavit of Christopher Cormie and Unauthenticated Exhibit Attached to Plaintiff's Motion to Remand; denying 8 Motion to Remand. Signed by Magistrate Judge Kathleen Kay on 7/16/2012. (crt,Dauterive, C)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION

CORMIE’S GROCERY & DELI, INC.
D/B/A CORMIE’S GROCERY

:

CIVIL ACTION NO. 12-562

:

JUDGE TRIMBLE

:

MAGISTRATE JUDGE KAY

VERSUS
COLONY INSURANCE COMPANY,
MIKE DEMARIE, and
MIKE DEMARIE INSURANCE
AGENCY, INC.

MEMORANDUM RULING

Before the court is a Motion to Remand [doc. 8] filed by plaintiff Cormie’s Grocery, Inc.
a Louisiana domiciliary (“the plaintiff”). The motion is opposed on equivalent grounds by
defendants, Colony Insurance Company, a corporation both incorporated and headquartered in
Virginia (“Colony”), and co- defendants Mike Demarie, and Mike Demarie Insurance Agency,
Inc. (together “Demarie”). Colony has also filed a Motion to Strike [doc. 13]. For the reasons
set forth herein, the defendant’s Motion to Strike [doc. 13] is hereby GRANTED and the
plaintiff’s Motion to Remand [doc. 8] is hereby DENIED.
I.
BACKGROUND
A. Facts
The plaintiff in this case, Cormie’s Grocery & Deli, Inc., is a family owned corporation
and grocery business operated by Christopher Cormie and his wife Tabitha. Mr. Cormie acquired
ownership from his father in 2008. Mike Demarie and Mike Demarie Insurance Agency, Inc.,

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both Louisiana domiciliaries, had provided insurance coverage and services to Cormie’s Grocery
for many years preceding its transfer to Christopher and Tabitha. Doc. 8, att. 2, p. 1. Though
neither Christopher nor Tabitha had ever owned a business prior to said transfer, Chistopher had
“worked for his [father] for many years before he and his wife [became the owners]”. Doc. 16,
p. 5.
On June 24, 2011 Cormie’s Grocery was forced to close indefinitely after a fire caused
substantial damage to the building. Subsequently, Christopher submitted a claim to the defendant
for loss of business income which was later denied on grounds that Cormie’s Grocery lacked the
requisite coverage for such loss. Doc. 1, att. 5, p. 6.
B. Procedural History
On March 2, 2012, the plaintiff filed a Petition for Damages [doc. 1, att. 5] in state court
stating causes of action against Colony and Demarie alleging inter allia negligence and negligent
misrepresentation by Demarie. Colony promptly filed a Notice of Removal [doc. 1]. In said
notice Colony claims this court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 as
plaintiff and Colony are diverse of citizenship and the amount in controversy exceeds $75,000.
Colony further claims that plaintiff has failed to state a cognizable claim against Demarie who,
Colony claims, was improperly joined and whose citizenship therefore should be ignored. Doc.
1, p. 5.
Thereafter the plaintiff filed its Motion to Remand [doc. 8] asserting that Demarie
“became a special advisor” to the plaintiff by assuming an affirmative duty to procure for the
plaintiff the proper amount of coverage via Demarie’s special knowledge of and long-standing
relationship with Cormie’s Grocery. Doc. 8, att. 1, p. 5-6. In addition, the plaintiff alleges that
Demarie, having assumed such duty, negligently and “unequivocally” misrepresented to the
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plaintiff the extent and amount of its insurance coverage and that Christopher and Tabitha
detrimentally relied upon said misrepresentation. Doc. 8, att. 1, p. 7.
C. The Evidence and Claims
Attached to plaintiff’s Motion to Remand are two documents which it claims establish “a
record of specific misrepresentations” by Demarie to Chistopher and Tabitha (emphasis in
original). Id. The evidence consists first of an affidavit given by Christopher Cormie (“the
affidavit”) [doc. 8, att. 2] which essentially mirrors and purports to substantiate the plaintiff’s
argument with respect to Demarie’s “special relationship” to the plaintiff. Also included is a
handwritten note [doc. 8, att. 3] containing several figures alleged to be policy limits which the
plaintiff claims were to be paid to Christopher and Tabitha for their losses after the fire. It is
averred by the plaintiff that the handwriting contained in the note is that of Mike Demarie. No
signatures are provided on the note.
Colony filed a Motion to Strike [doc. 13] both the affidavit and the handwritten note
arguing that the affidavit is not based on personal knowledge as required by Federal Rule of
Civil Procedure Rule 56(c)(4) and that the note is unauthenticated under Federal Rule of
Evidence 901. In its response to the defendant’s motion to strike, the plaintiff contends that only
a reasonable inference of personal knowledge is adequate to support an affidavit and that
Demarie’s special relationship with the plaintiff was sufficient to satisfy such an inference. Doc.
16, p. 4-5. Furthermore, the plaintiff argues that because the affidavit is adequate, it provides the
requisite authentication for the handwritten note1. Doc. 16, p. 6. Colony avers that the affidavit

1

  The  Federal Rules of Evidence, provide that authentication of an item of evidence requires that a proponent
produce “sufficient evidence to support a finding that the item is what the proponent claims it is.” FED. R. EVID.
901(a).

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is inadequate because it is not based on personal knowledge but merely on “what the affiant
believes he needs the facts to be in order to support [remand].” Doc. 12, p.2.
Colony claims that the plaintiff has failed to establish the existence of a “special
relationship” between Cormie’s Grocery and Demarie and thus has no claim against Demarie
upon which relief may be granted since Demarie had no duty to procure any specific type or
amount of insurance coverage for Cormie’s Grocery. Accordingly, Colony avers that Demarie
has been improperly joined as a defendant in this case, and that his non-diverse citizenship must
therefore be ignored, allowing this litigation to proceed in federal court pursuant to 28 U.S.C. §
1332. Doc. 12, p.8-9.
II.
LAW AND ANALYSIS
It is well-established under the improper joinder doctrine that if a court finds that a party
has been improperly joined in order to destroy the diversity necessary for a Federal Court to
exercise its constitutionally limited jurisdiction, the citizenship of the improperly joined party
may be disregarded thus allowing the case to proceed. In order to succeed on a claim of
improper joinder, the defendant must show 1) actual fraud in the pleading of jurisdictional facts
or 2) a plaintiff’s inability to establish a cause of action against the non-diverse party in state
court”. Cuevas v. BAC Home Loans Servicing, LP., 648 F.3d 242, 250 (5th Cir. 2011) (citing
Smallwood v. Ill. Cent. R.R. Co., 385 F. 3d 568, 573 (5th Cir. 2004). More specifically stated, a
court must determine if there is a reasonable basis for a court’s prediction that a plaintiff might
recover against the non-diverse party in question. Id. A court’s discretion in determining the
improper joinder question may “pierce the pleadings” to uncover facts that would prevent a
plaintiff’s recovery. Smallwood, 385 F. 3d. at 573-74. Thus, the primary issue before this court
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is whether the plaintiff would have a cause of action against Demarie in a Louisiana state court
such that the doctrine of improper joinder would not be triggered, thus defeating the defendant’s
removal and making remand proper.
The plaintiff in this case has leveled claims of negligence and negligent misrepresentation
against Demarie. In Louisiana viable claims of negligence are assessed using the duty-risk
approach which requires determinations as to 1) whether there was a duty owed, 2) whether that
duty was breeched, and 3) whether the resulting injury was within the scope of the risk of that
breech. Hill v. Lundin & Associates, Inc., 256 So.2d 620 (La. 1972); Dixie Drive It Yourself
System New Orleans Co. v. American Beverage Co., 137 So.2d 298 (La. 1962). In Pitre v.
Opelousas General Hosp., 530 So.2d 1151 (La. 1988), Justice Dennis notes:
The duty risk approach is most helpful…in cases where the only
issue is in reality whether the defendant stands in any relationship
to the plaintiff as to create any legally recognized obligation of
conduct for the plaintiff's benefit.
Pitre, supra at 1155 (citations omitted). Since the plaintiff’s injury in the case sub judice
(detrimental reliance) obviously falls within the scope of the risk of Demarie’s alleged breach of
his alleged duty to procure adequate insurance coverage for Cormie’s Grocery, the essential
inquiry here, rests primarily on whether Demarie, as an insurance agent, owed such a duty to the
plaintiff.
The controlling authority here is found in Isidore Newman School v. J. Everett Eaves Inc.
42 So.3d 352, 2009-2161 (La. 7/6/10) which caps a marked trend in jurisprudence and affirms
that Louisiana law has never recognized a duty owed by an insurance agent to spontaneously

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advise or procure any specific type or amount of insurance coverage for a client.2

The court

held that the responsibility rests with the insured to read his policy and request the required
coverage.3 Isidore, supra. However, an exception arises when a client shows that “1) the
insurance agent agreed to procure the insurance; 2) the agent failed to use ‘reasonable diligence’
in attempting to procure the insurance and failed to notify the client promptly that the agent did
not obtain the requested insurance; and 3) the agent acted in such a way that the client could
assume he was insured.” Id. at 356-57 (citing Karam v. St. Paul Fire and Marine Insurance Co.,
281 So.2d 728, 730-31 (La. 1973) (emphasis added). The court thus recognizes this narrow
exception only when an insured has specifically requested a certain type or amount of coverage
and the agent has agreed to procure that coverage.4
Here, the plaintiff presents no evidence that it ever made any inquiry into the status or
amount of its insurance coverage, nor does the plaintiff attempt to show that it specifically
requested any information regarding said insurance. In its Motion to Remand, the plaintiff relies
on both Karam, supra and Isidore, supra for the proposition that an agent owes a duty to advise
and procure the requisite amount of insurance coverage to a client. However, in Karam, the
insured had requested a specific amount of coverage and the agent admitted both his agreement
and failure to procure that requested amount. Isisdore, supra at 356 (citations omitted).

2

  See generally Smith v. Millers mutual Ins. Co., 419 So.2d 59 (La.App. 2 Cir. 1982) (holding that an insurance
agent has no duty to make recommendations to his client regarding increases in his personal liability limits); Graves
v. State Farm Auto Ins. Co., 01-1243 (La.App. 3 Cir. 6/26/02), 821 So. 2d 769 (holding that an insurance agent has
no affirmative duty to inquire into a client’s financial condition and make recommendations as to coverage of that
client)
3
 Cameron Parish School Bd. v. State Farm Fire and Cas. Co., 560 F.Supp.2d 485 (W.D.La.5/19/08).
4
 According to the court in Isidore, supra the Fourth Circuit, has given particular weight to this proposition. See City
Blueprint & Supply Co., Inc. v. Bob Boggio, et. al., 08-1093 (La.App. 4 Cir. 12/17/08), 3 So.3d 62 (held that an
agent has not duty to inform or advise an underinsured client absent a specific question from that client…and that
the client is responsible for reading the policy and is thus presumed to know its terms.); Heidingsfelder v. Hibernia
Insurance, L.L.C., 09-0753 (La.App. 4 Cir. 11/18/09), 25 So.3d 976 (holding that an insurance agent does not have
an ‘independent duty’ to spontaneously advise clients on coverage.)

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Likewise, in Isidore, supra the court rejected the argued proposition specifically on the grounds
that the Isidore Newman School had “never requested” a specific type or amount of coverage. Id.
at 359.
In Offshore Production Contractors, Inc. v. Republic Underwriters Insurance Company,
910 F.2d 224, 230, (5th Cir. 1990), a case upon which the plaintiff heavily relies, the court noted
that
Where an agent is familiar with the insured’s business, has reason
to know the risks against which an insured wants protection, and
has experience with the types of coverage available in a particular
market, we must construe an undertaking to procure insurance as
an agreement by the agent to provide coverage for the client’s
specific concerns.5
Offshore, supra at 230 (citations omitted). While it is arguable that the holding in Offshore
acknowledges an agent’s duty via a special relationship, the facts indicate that the notion of a
special relationship is based on special knowledge with respect to a particular field, industry, or
market.

In Offshore, Peter Barbara, an insurance agent who specialized in servicing oil

companies, had worked with Offshore Production Contractors (OPC) for many years and had
had at least 30 years experience in the insurance industry. Consistent with his standard practices
and usual business dealings with OPC, Barbara met with OPC’s CEO and made
recommendations for the acquisition of a blanket builder’s risk policy which OPC later accepted
on the condition that the policy include a stand-by clause that would cover the company in case

5

 The court cites a sting of cases that support this proposition. See generally Durham v. McFarland, Gay and Clay
Inc., 527 So.2d 403 (Insurance agent knew client needed flood insurance); Cusimano v. St. Paul Fire & Marine
Insurance Co., 405 So.2d 1382 (Agent knew insured wanted coverage of a certain amount and therefore owed a duty
to client.) In both cases, evidence is proffered that the clients had explicitly expressed their desire to the agent for a
specific type or amount of insurance and their requests were agreed to. In Durham, supra the plaintiff offered
“emphatic” testimony that he had specifically requested flood insurance which the agent then confirmed on crossexamination. In Cuisimano, supra the court noted that the client had made a telephone request for additional
coverage and had not received that requested coverage.

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of downtime due to bad weather.6 Barbara helped draft the policy which, after several revisions,
ultimately did not include the desired coverage. Suit was filed when OPC’s insurance claim was
denied following losses incurred due to inclement weather in the Gulf of Mexico which had
effectively prevented OPC’s operations there for nearly one month. The record indicated that
Barbara did not provide OPC with a copy of its policy until well after the occurrence of the
incident on which its insurance claim was based. Offshore, 910 F.2d at 226-29. Noting that
OPC would not have acquired stand-by coverage if it did not include coverage for potential
weather delays, the court pointed out that during meetings with Barbara OPC had expressed
concerns over coverage for bad weather and that Barbara had acknowledged those expressions.
Through his actions and knowledge of OPC’s desires, the court found that Barbara had agreed to
procure the desired coverage and by failing to do so was liable to OPC. Id. at 229-30.
In the present case, the plaintiff alleges that Demarie, through his long-standing
relationship with Cormie’s Grocery, had acquired a special relationship similar to that
contemplated in Offshore. The plaintiff claims that Demarie was intimately familiar with the
plaintiff’s “income, sales, expenses, cash flow, and losses,” but fails to point out how such
knowledge would constitute “special” knowledge beyond what any insurance agent or agency
would know of its clients. No evidence is provided that Demarie exclusively catered to Cormie’s
Grocery, or that its services were specialized to the market of grocery establishments.
Furthermore, unlike in Offshore, there is no evidence to indicate that Demarie failed to provide
Christopher and Tabitha with copies of their insurance policy which it was their duty to read.
Blueprint & Supply Co., Inc. 3 So.3d 62 at 66.

6

  A stand-by clause covers loss incurred when damage or other circumstances temporarily prevent an insured’s
ability to continue work on a project. Offshore, 910 F.2d at 227.

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As evidence of Demarie’s special relationship the plaintiff offers only the affidavit and
handwritten note which it claims constitutes a record of misrepresentation. According to Federal Rule of
Civil Procedure 56(c)(4), an affidavit “must be made on personal knowledge, set out facts that

would be admissible in evidence, and show that the affiant or declarant is competent to testify on
the matters stated.”7

Though “evidence to prove personal knowledge may consist of the

witness’s own testimony,” it is inadmissible if such personal knowledge is insufficient. FED. R.
EVID 602.
Colony contends that Christopher’s declarations about what Demarie “knew” and his
statements about Demarie’s role as a “special advisor” could not have been within his personal
knowledge. Doc. 8, att. 2, p. 1-2. Citing DIRECTV, Inc. v. Budden, 420 F. 3d 521 (5th Cir.
2005), the plaintiff counters arguing that “it is sufficient if personal knowledge can reasonably be
inferred” and defines such personal knowledge as that which “falls within the affiants ‘sphere of
responsibility’ as a corporate employee.” Doc. 16, p. 3.
The plaintiff further contends that Christopher’s intimate involvement with Cormie’s
Grocery as the son and grandson of its former proprietors is a sufficient factual basis for this
court to conclude that a reasonable inference of personal knowledge existed. The argument is
unpersuasive. Though Christopher, as a corporate owner of Cormie’s Grocery, would have
personal knowledge as to its regular business dealings, his “sphere of responsibility” does not
extend to knowledge held by Demarie. Consequently, Christopher does not have personal
knowledge of Demarie’s state of mind. The portions of the affidavit relating to a special
relationship are thus invalid and should be stricken.

7

 In response to the defendant’s motion to strike, the plaintiff distinguishes between requisite evidence for summary
judgment and requisite evidence for remand but fails to elaborate on the distinction. It is well established that in
rendering decisions on motions to remand, courts should “pierce the pleadings” and consider “summary judgmenttype evidence such as affidavits.” Smallwood v. Ill. Cent. R.R. Co., 385 F. 3d 568 (5th Cir. 2004). 

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Furthermore, nothing in the affidavit provides for the authentication of the handwritten
note itself. Though Christopher broadly attests to “specific misrepresentations in writing,” he
provides no statement as to whether those misrepresentations were the same as those provided in
the handwritten note. It is the opinion of this court that such discrepancies render the affidavit
insufficient to show that Demarie agreed to procure any particular coverage. Additionally, the
affidavit provides no evidence that Christopher or Tabitha ever specifically requested a particular
amount or type of insurance. Doc. 16, p. 6. Accordingly, the handwritten note, even if it was
authenticated, is not sufficient to persuade this court that Demarie owed a duty to the plaintiff.
Under Louisiana law as recently affirmed by the Louisiana Supreme Court in Isidore,
supra, an insurance agent has no duty to advise, recommend, or procure for its client any specific
amount or type of coverage unless the client requests the same and the agent agrees to do so.
Furthermore, the client is responsible for reading the policy received and for assessing the
amount and type of coverage needed. Isidore, supra at 359). Since Demarie had no duty to
independently advise the plaintiff in this case, the plaintiff’s claims for negligence and negligent
misrepresentation are not actionable.

Additionally, there is a lack of credible evidence

substantiating the exception of a special relationship between the plaintiff and Demarie.
Therefore, there is no “reasonable basis” for this court to predict that Cormie’s Grocery might
recover against Demarie. Smallwood, 385 F. 3d at 573.
Colony has thus succeeded in showing the plaintiff’s improper joinder of Demarie by
establishing the plaintiff’s “inability to establish a cause of action against the non-diverse party
in state court.” Id. As a party improperly joined Demarie’s non-diverse citizenship can be
ignored.

Since diversity thus exists between the parties, this case falls within the proper

jurisdiction of this court under 28 U.S.C. § 1332.
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CONCLUSION
For the reasons set forth above, the defendant’s Motion to Strike [doc. 13] is hereby
GRANTED and the plaintiff’s Motion to Remand [doc. 8] is hereby DENIED.
THUS DONE AND SIGNED in Chambers this 16th day of July, 2012.

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